After its shareholders trashed a pay plan for the company’s top executives in July, Tata Motors has again sought their approval to ratify the remuneration paid to them, this time with substantive explanations accompanying the resolution.
In a filing with the bourses on Monday, the carmaker said it was seeking shareholders’ approval to ratify the salaries paid to its top three executives in FY14, along with what is proposed to be paid to two of them over FY15 and FY16. One of them, Karl Slym, Tata Motors’ former managing director, died in January. The other two executives are Ravindra Pisharody, executive director (commercial vehicles) and Satish Borwankar, executive director (quality).
In a postal ballot held in July, Tata Motors’ shareholders rejected a resolution to approve payments to executive directors in excess of their minimum entitlement, in the wake of the company’s poor performance in fiscal 2014. The new Companies Act requires listed firms making a low, or no, profit to limit the salary they pay to their executives, depending on the size of the company. The company needs approval from 75% of its shareholders to pay in excess of this limit.
While presenting the fresh proposal and calling for another postal ballot on Monday, Tata Motors went to great lengths to impress upon shareholders the need to pay competitive remuneration to its top management. It pointed out that weak market conditions and increased competition in the auto sector over the last five years was responsible for the poor financial performance of the company.
The result of the postal ballot is expected to be out on January 23.
Tata Motors said it had paid significantly lower commissions and incentive-based remunerations to its executive directors in FY14, compared to FY13. In case of Pisharody, this was lower by 28.5% and, for Borwankar, it was lower by 11.8%. The company tried to explain that salary increments were decided keeping industry benchmarks in mind, the company’s growth plans and with a view to retain talent.
Tata Motors’ standalone business (domestic operations) posted a net profit of Rs 334.5 crore on a turnover of Rs34,288 crore for the year ended March 30.
The company sought shareholders’ approval on Monday to not reclaim Rs 3.28 crore paid to Pisharody, Rs 2.4 crore paid to Borwankar and Rs 14.6 crore from the legal heirs of Slym.
The carmaker, part of the $100-billion Tata Group, also sought to reassure shareholders that it expected performance to turn around soon.
“The medium and heavy commercial vehicles (M&HCV) segment of the company has started to display year-on-year growth in double digits since August. The company expects growth in M&HCV segment to continue in the coming quarter and more sustainable and comprehensive growth to commence from Q4 of FY2014-15,” the Tata Motors’ filing said.
The Tata Motors stock closed at Rs 493.80 on the BSE on Monday, down 1.24%. The bourse’s benchmark index, Sensex, lost 0.11% to end at 27,319.56.